Committee may limit banks' profits from fees

"Before we did not know what we were paying for, but it is now 'transparent' that the banks are ripping us off."

Rony Hizkiyahu 88 224 (photo credit: Ariel Jerozolimski)
Rony Hizkiyahu 88 224
(photo credit: Ariel Jerozolimski)
The Knesset Economics Committee warned Tuesday that it would consider legislative proposals to limit banks' ability to generate profits from fees unless Supervisor of Banks Rony Hizkiyahu intervened, after it was announced that fee tariffs would be hiked up starting next month. "One of the main aims of the bank fee reform was to increase transparency and reduce the number of fees paid by the public. Transparency is important, but not enough. The bank fee reform achieved that, whereas before we did not know what we were paying for, it is now 'transparent' that the banks are ripping us off," said MK Gilad Erdan (Likud), chairman of the Knesset Economics Committee at Tuesday's urgent committee meeting scheduled in response to the presentation of the new tariffs on Sunday. "If the Bank of Israel is interested in the stability of the banking sector we will respond with legislative proposals determining on what it will be forbidden to charge fees." According to the much-awaited uniform list of banking fees and commissions, part of the bank fees reform, the number of transaction fees charged by the country's banks will be reduced by about two-thirds - from 198 to 72 - come July. "There is no reason for allowing the banks to make up for lost revenue as a result of the reduction in the number of unjustified bank fees," said Erdan. Erdan urged the supervisor of banks to disallow the banks to raise their checking account fees as planned by the banks next month. "The new bank fee law was seeking to hurt the banks' profits generated from fees, which were exaggerated profits," said MK David Tal at the committee meeting. "The fees charged by the banks are higher than the fees collected by drug barons in Columbia." Also at the meeting, Hizkiyahu said that as a result of the bank fee reform, the country's banks are expected to incur a loss of NIS 500 million in revenue. Under the new bank tariffs, fees and commissions for checking accounts will be cheaper for customers who use direct-banking services ranging from NIS 1.35 per operation to NIS 2.9, but more expensive for those who make their transactions via teller- assisted services mainly used by the elderly and the poorer sections of the population. Teller-assisted services will be charged a fee of between NIS 5.5 per operation to NIS 7. Erdan called upon Hizkiyahu to provide immediate response to those who will be negatively affected by higher fees of teller-assisted services before the reform comes into effect next month. "The Bank of Israel needs to determine a basket of fees priced at a reduced rate so that fees will not become more expensive for certain sectors of the population," he said.